QuickBooks is considered a good and reliable property management software. In simple terms, QuickBooks has the ability to help in rental property accounting substitutions. Users can set up their properties as customers, sub-customers, tenants, etc., to monitor different transaction types.
Hence, it is important to record the rental properties transactions you handle for the efficient management organization in QuickBooks Desktop.
Dancing Numbers helps small businesses, entrepreneurs, and CPAs to do smart transferring of data to and from QuickBooks Desktop. Utilize import, export, and delete services of Dancing Numbers software.
For those who are property managers, they offer services to tenants of the property or property owners. In such a scenario, you need to make and manage two company files.
Property Management Company: It is your organization. Here you acquire earnings from managing the properties.
Rental Property Company: You pay bills, collect rent, and then take care of the property on behalf of the owner.
Note: With only these two company files, you will be able to separate the companies’ transactions from one another.
Now let’s learn how to create a company file for a particular rental company.
How to Prepare a Company File for a Particular Rental Company?
In a company file for a rental company, you monitor every transaction for the properties you handle. Here you can register the expenses as well as the rent income.
Take a look at the steps to create such a company file for a rental company:
Step 1: Set up the Vendors and Tenants.
You need to set up the tenants as customers of properties or jobs of properties. Then set properties as customers and owners as vendors.
Note: It is possible to set up the property owners as vendors. This is because you are paying them the net income from their property.
Step 2: Set up the Items and the Accounts too.
Before you try to record any transaction, you must set up accounts along with service items that you access. Here are some of them that you can set up:
Set up deposits as liabilities, checking accounts as assets, property management expenses, and the property owner payments in the form of expenses, common area maintenance expenditure, and rent income as income.
Note: Do you handle commercial properties too? Then you must set up a service item and income account if you charge your tenants for the common area maintenance expenses. This helps you monitor common area maintenance income separate from other expenses that you charge.
Step 3: Record the Deposits for Security
Several property owners request a security deposit from the tenants during the commencement of the rent tenure. It is the liability of the rental company because you may give back some or all of the particular amount at the end of the tenure.
It is possible for you to use the liability account like a Security Deposit to monitor every tenant’s deposit with the steps given below:
Step 1: Navigate to the Banking menu. Now choose the Make Deposits option.
Step 2: In the particular column drop-down for Received From, choose the tenant.
Step 3: In the given drop-down for From Account, choose the security deposit account you set up.
Step 4: Type in the amount and choose Save and Close.
Step 4: Monitor the Rent Earnings
You will be able to record the rent from your particular tenants in two possible ways. It is influenced by when the actual rent payment is received.
Step 1: Record the earnings from rent as payments from sales receipts and income.
Step 2: Ensure to choose the tenant and particular item.
Note: Tenants often make payments that are late. It is possible to use QuickBooks finance charges to determine and include the late charges to their invoices.
Step 5: Record the Expenses for Every Property
You are also required to monitor the expenses. Such expenses include property management fees and property expenses.
There are certain expenses to preserve a property like repairs and utility. Here are the steps to record the property expenses:
Step 1: Based on your payment, record the expenses:
- As checks, if the vendors are paid right away
- As bills, if you make payment at a later date
Step 2: From the drop-down for Customer: Job, choose the tenant or the property you want.
Property Management Expense
The fees for property management are based on your precise agreement with every property owner. In case the base of property’s net income or gross income, the fee can be determined by using the Profit and Loss report.
You can register the fees for property management as a check or even as a bill. Just ensure to choose the tenant or property from the drop-down of Customer:Job.
How to Charge an Expense to Any Tenant?
When any damage is caused to the property by any tenant, or request the owner to complete a specific task, the expense for that is charged to their account rather than the owner. These costs are named Billable Expenses.
When you charge the tenant for those expenses, these extra expenses are added to their sales receipts or invoice with the help of the steps provided below:
Step 1: Record the particular expense as a check or bill.
Step 2: From the drop-down for Customer:Job, choose the tenant.
Step 3: In the particular Billable column, choose the checkbox.
Step 4: After an invoice has been created or a sales receipt, add the particular billable costs.
Step 6: Pay Money to the Owners of the Property
After you record all the expenses and income of the properties, now you can see the due amount to every owner of the property.
Note: It is possible to use a Profit and Loss report to see or determine how much to send to the account of the property owners.
Step 1: Write a check to do the payment.
Step 2: Ensure to choose the property owner.
Step 3: From the drop-down of the Account column, choose the payment account of the owner.
Step 4: Run the Profit and Loss report to see the net income for every property. In case the owner of the property wants to leave a portion of the given net income, you will see the net income amount. If that is not the case, the net income must be zero.
How to Create a Company File for a Particular Property Management Company?
In the property management company file, you can monitor the transactions of your business. It is where you will register your expenses and income for managing properties.
Here is the step to create a company file for a property management company:
Step 1: Set up your property owners as your customers.
Step 2: Set up items and accounts.
Set up equipment costs as assets, checking accounts, and furniture as assets too. The payroll liabilities should be set as a liability, utilities and insurance as an expense, and income as income.
Step 3: Record the income as Property Management.
You can register income from the property owners in two different ways. It is based on when you get the original payment.
- Record the income from management of the property owners.
- Record the income as invoices when the payment is received at a later date.
- Record the income as sales receipts if the payment is received immediately..
- Ensure to choose the tenant along with the service team you had set up.
- Add the amount got from property owners.
We hope that the process to record transactions or create company files in QuickBooks Desktop in a rental company is clear to you. We have classified and stated all the steps concerning this requirement. We have pointed out the steps to prepare a company file in a rental company and a property management company too.
Looking for a professional expert to get the right assistance for your problems? Here, we have a team of professional and experienced team members to fix your technical, functional, data transfer, installation, update, upgrade, or data migrations errors. We are here at Dancing Numbers available to assist you with all your queries. To fix these queries you can get in touch with us via a toll-free number
+1-800-596-0806 or chat with experts.
Frequently Asked Questions (Faqs)
Will QuickBooks be Helpful in Property Management?
QuickBooks is always the top priority for the professionals of Property Management for the concerned business.
QuickBooks can be used to handle all your rental transactions. It can be done by setting properties as the customers and tenants as sub-customers. The tenant sub-expense will display related payments, rent invoices, and the current balance.